What are the risks and benefits of buying a house with a friend or sibling?

Psychologist and relationship expert Jo Hemmings outlined some of the key issues that first-time buyers should consider before teaming up on a property together:

Honest and candid communication

When considering buying a property with a friend or family member, the relationship will inevitably change. Before so much as opening a property app for ‘just a look’, potential buyers should discuss their finances and future plans. Discussing the practical side of owning a property from the start helps to maintain communication and trust. Practical issues can include anything from being a cat or dog person, playing a musical instrument to how often someone washes the dishes.

Sibling issues

Buying a home with a sibling may be the perfect answer to getting on the property ladder for some, but buyers should be aware that it can cause issues in the wider family dynamic. Resentment, favouritism or rivalry may be a concern. Siblings should have open discussions between themselves and family members so that they can air and resolve any potential issues in advance. 

Other friends or family

There may be some doubts expressed by other friends, or there may be resentment that they weren’t asked to go in on the property purchase. The buyers should be as clear and as gentle as possible as to why they’ve made the decision to buy with someone else, and to remember that everyone’s circumstances are different. They shouldn’t feel guilty about taking their first steps onto the property ladder. 

Investment disparity

Often there can be a disparity in the amount of money each of the buying parties is able to save for a deposit, or equally a difference in the proportion of the monthly mortgage each is able to pay. Drawing up a legal agreement regarding co-ownership is essential to cover each owner’s percentage of equity in the property. While this might feel like ‘overkill’ between friends or family, a formal document will give the buyers clarity and help to avoid any misunderstandings (and fallings out!) further down the line.

Property decisions

Not every property is right for everyone’s needs, so buyers should begin by discussing the type of property they want. A good starting point for this would be whether it’s a flat or house, leasehold or freehold, where it might be located and how long each party plans on living there.

Also, buyers should keep in mind that there are costs involved in managing and maintaining homes, such as service charges if it’s a flat. These should be joint decisions, but it’s important that the buyers outline who is ultimately responsible for any aspects of this or whether everything will be decided jointly. 

Understanding conflict

Sometimes enthusiasm and excitement at buying a property together can mask potential disagreements that may arise later. Even if each buyer has jointly decided that they want a property with a garden or to invest in a new kitchen, disagreements over major or minor issues will inevitably happen. The buyers should decide how they’re going to resolve any potential conflict before it arises, and most importantly raise these issues with the purchasing partner when they do.

A fun way to try and understand these is the “newlywed” game, where you give the answer to a question you expect the other person would give, to see how well the buyers know each other - and find out where they might know less that they think about the other person. 

Lifestyle changes

When buying a property, it is important to consider that circumstances can change. This includes everything from a new partner to a job change or relocation, which can all impact on the original plan. To mitigate any issues down the line it is wise to draw up an exit strategy agreement should one of the buyers want to sell or move out before the other.

Seek out advice

Buyers should speak to anyone who has experience in this area to help with the decision. This includes the bank, which can offer mortgage advice, friends or family who have been through the same experience or a boss regarding career potential. This can help buyers to foresee issues they might have missed.